2019 Year in Review
In this article, I provide a discussion of the 2019 year in review for the US stock market. This year has shaped up to be an excellent year for stock market returns. But in early-2019, it did not look like this year would good at all. Several stock market indices trended down starting in late-Summer or early-Fall in 2018 due to a global slowdown in manufacturing, contraction in some European economies, and very slow growth in China. This trend looked like it would extend into 2019 continuing to pressure stock markets. But a bottom for the broader stock market was reached in January 2019 and markets started recovering.
But still, it was not clear if the U.S. stock market would have a good year in 2019. Manufacturing continued to contract, and tariff and trade headwinds built through the year. Many manufacturers have indicated that tariffs are negatively impacting their business resulting in job losses and higher costs. The Federal Reserve has recently published a new report on the negative effect of tariffs on U.S. manufacturers. In fact, business confidence is below 50 at the moment. The U.S. ISM Purchasing Managers Index (PMI) has been below 50 since August 2019 pointing to the fourth straight month of declining manufacturing through November.
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A Slowing U.S. Economy
There were also some other definite signs that the U.S. economy was slowing. Consumer loan delinquency rates have been rising. Banks willingness to lend has been dropping toward zero. CEO expectations minus consumer expectations are near a record low. Corporate profits as a share of the GDP has been coming down.
Moreover, the yield curve inverted, as the 10-year and 30-year U.S. Treasury yields dropped dramatically earlier this year. The 10-year yield dropped below that of the 2-year yield, which has historically been one of the most consistent recession indicators. This event has preceded every recession since 1950. But with that said, this indicator is a leading indicator with the downturn tending to hit hardest about 22 months after the inversion. So, from this perspective we should except a recession in 2021.
U.S. Federal Reserve Takes Action
In 2019, the Fed rode to the rescue of stock markets by lowering the Federal Funds Rate. The Fed battled the negative headwinds of tariffs and slowing manufacturing with three reductions of the Federal Funds Rate in 2019. The New York Fed also conducted temporary Repo operations to boost liquidity in overnight lending markets between banks. This is the first time since the Great Recession that the Fed has acted in the overnight lending market. Although temporary, the Fed is now in the third month of conducting these Repo operations. Lastly, tariff and trade news improved somewhat as the U.S. and China spent the last couple of months at the negotiating table and seemingly came to a ‘Phase I’ agreement. The details are yet to be published. But markets responded favorably to the aforesaid events and continued to gain through the year.
Returns Are Solid
At the time of writing this article, the Dow Jones Industrial Average (DJI) is up ~25% year-to-date, the S&P 500 is up ~29%, and the NASDAQ Composite is up ~39%, and the Russell 2000 is up ~25% assuming dividends are reinvested. These are excellent values. To put it in context, 2019 is shaping up to be the best year for the Dow Jones since 2017. Similarly, it seems like the best year for the S&P 500, NASDAQ Composite, and Russell 2000 since 2013.
In addition, many stocks are setting record highs. For instance, Microsoft Corporation (MSFT) is trading at near its 52-week and all-time high. The company is now worth over $1.2T, a value that was probably thought unattainable just a few years ago. In a second example, Apple Inc (AAPL) reached a market valuation of ~$1.29T. The list of stocks trading at 52-week and all-time high is lengthy. But the flipside of that is valuations have been going up. For example, Microsoft is trading at nearly 30X consensus forward earnings. But with that said, reviewing the year 2019, it ended up being a winner for US stock market.
2019 Year in Review of The Dividend Power Blog
As 2019 comes to a close I have decided to look back on my six months of blogging on the Dividend Power site. I thought I would provide my readers a review of the blogs statistics and top 5 posts by page views. The blog was an extension of my freelance equity analyst writing that restarted on Seeking Alpha in late-2018. For those who are interested, I actually made my first post in 2006 back when Seeking Alpha was relatively new and the concept of crowd-sourced financial analysis was still untried for the most part. I took a long hiatus and started writing again in late-2018. The response to articles on Seeking Alpha has been decent and encouraged me to write more.
Financial writing is not in my educational background or even my profession. I am mostly self-taught and learned through educating myself. But since I resumed writing on Seeking Alpha, it has opened several new opportunities for me. I now write part-time for a leading dividend stock newsletter as a freelance equity analyst. My rankings on TipRanks (an independent analyst tracking site) have moved steadily upward. I am now in the Top 10% out of over 7,100 financial bloggers based on my articles on Seeking Alpha. I have also guest posted on a few other sites including ValueWalk.
Total Number of Posts
Additionally, I started this blog that contains both new content and summary content from my posts on Seeking Alpha. The first post for the Dividend Power blog was in July 2019. The post was entitled Huntington Ingalls Industries: A Wide Moat In Naval Shipbuilding But Future Optimism Is Priced In. This was an article on my profile at Seeking Alpha. Since then I have published 76 total posts. The most recent post was Dividend Champions Analysis: Matthews International Is The Newest Champion.
The blog received 4,587 visitors since it started in July 2019 (as December 29, 2019) and 11,119 page views. October was the best month with 3,975 views and the best day was December 26th. The blog has also attracted an international readership. The top five countries with the most views in order are from the United States, Canada, Germany, Spain, and Netherlands. The leading search terms are related to ‘dividend aristocrats’ and ‘dividend kings’. The top 5 articles in terms of page view are listed below.
- Altria: Now A Dividend King But Cloudy Future
- 3 Worst Performing Dow Jones Stocks in 2019
- The List of Dividend Kings for 2019
- The List of Dividend Aristocrats in 2019
- The List of Dividend Champions in 2019
Expanded into Social Media
Recently, I have expanded into social media and now have a Twitter account for the Dividend Power blog as of September 2019. You can also follow me there for those that are active on Twitter. The format of the Dividend Power blog has also been updated to include more graphics, easier to follow headers, and an e-mail list. If you subscribe you will receive a free weekly e-mail keeping you up to date on posts. The total followers and e-mail subscribers for the Dividend Power blog is roughly 200 and growing. Another 2,423 people follow me on Seeking Alpha and this number is also growing.
Overall, I view 2019 as a fairly successful year for the Dividend Power blog. Thanks for reading my blog and following me.
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.